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Farmers unimpressed with new drought policy

TIM PALMER: A new drought policy has finally been agreed on by the Commonwealth and states but farmers aren't satisfied.

The new policy which takes effect from the middle of next year marks a shift from the drought declaration system. The changes are meant to prepare farmers to be more resilient to drought as Lexi Metherell reports.

LEXI METHERELL: During the last drought, farmers received exceptional circumstances support if they were eligible and in an area declared in drought. It won't work like that from the 1st of July next year.

South Australia's Gail Gago is one of the agriculture ministers who signed off on the new drought policy today.

GAIL GAGO: There will be no regional delineation it will be household-by-household needs. So in the past if an area was declared exceptional circumstances, if your farm was on one side of the line, you know inside the line, you got lots of support and assistance and if you were outside the line you missed out. So that does away will all of that completely and it's designed around the individual needs of particular farm businesses.

LEXI METHERELL: One of the elements of the package is a new 'farm household support payment'. The Federal Agriculture Minister Joe Ludwig says it will be equivalent to the unemployment benefit - Newstart. He says unlike under the old drought assistance system, geography won't determine eligibility.

JOE LUDWIG: It's just like social security. Social security provides that safety net, you go into Centrelink, so as an example the way social security works, you indicate what your assets or income is and they then make an assessment based on that and the guidelines that are required and then say here you're certainly unemployed, you don't have any income, you don't have any significant assets or you don't have, in this instance, a job therefore you're entitled to social security. The same sort of concept.

LEXI METHERELL: There are also changes to the Farm Management Deposits Scheme. That's the program which assists farmers in evening out their income flows by claiming a tax deduction for deposits.

The amount of non-farm income farmers can earn and still be eligible for the scheme has been lifted from $65,000 to $100,000.

GEOFF HALL: That indicates to me from the Government that they're keen on supporting farms that have alternate sources of income.

LEXI METHERELL: Geoff Hall has spent many years as an agribusiness accountant in Western Australia and is with the firm RSM Bird Cameron. He says encouraging farmers to diversify their income is positive.

GEOFF HALL: I think it encourages them to diversify and certainly still access some of the package, some aspects of the package whereas they may not have been eligible for in the previous time.

LEXI METHERELL: The new policy emphasises preparing farmers for drought. States will be responsible for providing financial counselling and training to improve drought resilience. But farmers want more.

The National Farmers Federation's vice president is Brent Finlay.

BRENT FINLAY: The in-business support isn't there, what mechanism that that will be provided in, how we do that, that's what we're looking for, that's what farmers around Australia are looking for and they need to know because that I guess gives them the confidence to keep doing what they do well and that's produce food and fibre for this country.

LEXI METHERELL: Isn't there a risk that if you do provide too much support for drought circumstances that you discourage farmers from drought-proofing or shielding their farms from drought?

BRENT FINLAY: And we're not talking about providing too much, we're just talking about providing something that's there to support them, we're not looking for drought assistance that holds them up, props them up, even unviable farms. But these are viable operations that when they go into drought, when they're being smashed that there is some support for them to continue.

LEXI METHERELL: Exactly how much are you looking for?

BRENT FINLAY: Ah no… every case is different so it's enough support to keep viable and you have to be viable and that's why we also welcome the announcement last weekend in the farm financial package of the financial councillors we see that as a really important part of this.

LEXI METHERELL: But you would have put a figure in aggregate to the Government surely?

BRENT FINLAY: Ah no we didn't come out and put any numbers across Australia on the table because every drought is different and every region is different and every industry is different.